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Taking Stock of Their Beliefs : Trends: Turning their shares into swords, social investors are trying to direct companies' policies on issues from the environment to diversity.


WASHINGTON — Call it the investors' equivalent of sleeping with the enemy.

With only $1,500 worth of stock, the Marin Institute for the Prevention of Alcohol and Other Drug Problems led an effort this spring to prod the world's largest beer maker to evaluate the effect of its advertising on underage drinkers.

Although the proxy resolution, co-sponsored by two Roman Catholic religious orders, got only 6.3% of shares voted, discussion of the issue took up nearly half of the two-hour annual meeting of Anheuser-Busch Companies Inc. at a golf and tennis resort in Williamsburg, Va.

"We consider it a huge victory that we got over 12 million shares," said Diana Conti, executive director of the San Rafael-based institute. She noted that the result was sufficient to put the resolution on the proxy statement again next year. "This is a way for the little voices to be heard."

The movement known as social investing--concerned shareholders trying to affect company policies beyond those involving just the bottom line--has been around for nearly a quarter of a century. Its greatest success came in the late 1980s when more than 150 American companies, after years of stockholder badgering, divested themselves of business in white-run South Africa.

With the collapse of apartheid, the focus has changed.

"We work on about 15 issues from baby formula and the environment, tobacco, alcohol, community reinvestment, board diversity and equal opportunity to working conditions in American factories in Mexico and foreign military sales," said Timothy H. Smith, executive director of the Interfaith Center on Corporate Responsibility (ICCR).

ICCR, representing 275 Christian and Jewish institutional investors with a total of $45 billion in shares, has been a leader of what some have called the Moral Minority. It is a movement that may be taking on greater importance with the federal government in an increasingly deregulatory mood. This year, the New York-based center, which owns no shares itself, has helped coordinate campaigns involving 180 resolutions affecting 133 corporations.

In general, social investors are regular shareholders, with pension and insurance funds to worry about just like other organizations. They have targeted companies in which they already own a considerable stake, looking to alter a few policies they consider objectionable by managements they otherwise support.

But in a few cases, activists have bought into companies they actively dislike for the sole purpose of trying to alter corporate behavior. Current rules permit shareholders to propose resolutions on proxy statements if they own $1,000 worth of stock.

Earlier this year, the Jessie Noyes Foundation, a New York-based group that supports grass-roots organizing, was about to sell all its stock in Intel Corp. because of its concern over the environmental impact of a planned pentium chip factory at Rio Rancho, N.M.

But at the last minute, Stephen Viederman, foundation president, told his investment manager to hold onto 100 shares so the foundation could sponsor a resolution that would require Intel to inform the community of the environmental impact of its factory.

Like the Anheuser-Busch resolution, the Intel one lost, but it did receive sufficient votes for sponsors to bring it up again--and to put pressure on the company.

"I've had three meetings with Intel on this so far," Viederman said. "We want them to tell the community what they are doing about the water and air situation."


Father Michael Crosby, a Franciscan priest from the Province of St. Joseph of the Capuchin Order, chairs ICCR's tobacco campaign and was a pioneer in the use of minimum shares for maximum social impact.

Crosby said that when on a trip to Latin America in 1980, he was appalled by the predominance of smokers and by the aggressive marketing campaigns of U.S. tobacco companies. He asked the treasurer of his Milwaukee-based order to buy 10 shares each of Philip Morris and R.J. Reynolds (since merged with Nabisco).

Armed with his tiny stake, Crosby repeatedly filed resolutions that were ultimately instrumental in persuading the companies to put health warning labels on cigarettes sold throughout the world.

"It isn't widespread," he said of the technique. "It only happens when people are very committed to a specific issue and they feel this is the only way to deal with it. It buys you a pulpit at the annual meeting."

The Marin Institute turned to the tactic when it discovered to its chagrin that the Beryl Buck Trust, which funds the institute, owned nearly $30 million in alcohol and tobacco stocks in its $570-million portfolio.

James Mosher, the institute's former executive director and now senior research fellow, said he went to Wells Fargo Bank, which is in charge of the trust's investments, and urged officials to get rid of the stock.

"I didn't want to be accused of benefiting from the very industries involved in creating the problem of alcohol and tobacco addiction," Mosher said.

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